UAE announces new incentives for SMEs

The UAE has taken various steps to create a more attractive environment for foreign investment. Bloomberg

The UAE government has issued a ministerial resolution to support Emirati small and medium enterprises (SMEs) with new incentives, according to a report.

The beneficiary companies should be members of accredited funds or programmes that support SMEs in the Emirates, state-owned news agency Wam reported on Thursday.

"Empowering the people of the UAE continues to be a top priority … which encourages us all to keep working hard to serve them better,” Wam quoted Khalil Al Khoori, acting undersecretary for human resources affairs at the UAE’s Ministry of Human Resources and Emiratisation, as saying.

"We are proud of the UAE’s national wealth, its young men and women who are key in the efforts to diversify the economy and accelerate economic development efforts to build an active world-leading economy, enhance the nation’s economic competitiveness, and encourage innovation and entrepreneurship among its citizens."

The new incentives include classifying up to five enterprises under tier 1 category per owner, instead of two enterprises, and a five-year classification under tier 1 category starting from the date of the licence issuance, the report said.

The ministerial resolution outlines five conditions for any SME to be classified under tier 1 for five years.

First, the business owner, or all the partners, must be Emirati(s); second, the enterprise must be a member of a government-accredited fund/programme for supporting SMEs; third, it must be managed by the owner, or by an Emirati manager; fourth, the owner may not own or be a partner in another enterprise that is restricted by the ministry and has any fines; and fifth, the owner may not own more than five companies.

"Empowering SMEs is a strategic priority within the nation’s continuous efforts to develop the business sector in the UAE, which has made great strides in laying the foundations for entrepreneurship and encouraging innovative start-ups and SMEs,” Mr Al Khoori said.

SMEs are the backbone of the UAE economy, with the government introducing economic support packages to help business owners weather the Covid-19 pandemic.

The Emirates has also taken steps to create a more attractive environment for foreign investment by easing visa rules, liberating company ownership rules and updating laws.

The UAE ranks first worldwide in the latest Global Entrepreneurship Index, outperforming major global economies such as the US, the UK, Japan, Canada, South Korea and some EU countries. Last year, the Emirates was placed fourth in the GEI rankings, which are compiled by London-based researcher Global Entrepreneurship Monitor.